Month: April 2020

A partnership . . .?

Select ONE answer:

1. must be formed by deed.
2. must be formed by agreement in writing.
3. may be formed by verbal agreement.
4. None of the above.

 

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – All that’s required to form a partnership is for two or more people to agree to become business partners. They do not have to agree anything else. However. in order to avoid disputes and ill- feeling later on, it is preferable that they agree all relevant matters and record these in some kind of formal written agreement.
4. Not correct

 

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following information relates to a hardware merchant, who is not registered for VAT and who makes all purchases on credit.

at 31 December 1996         at 31 December 1995

Stock:                  £10,600                                  £10,300
Debtors:             £5,400                                    £4,800
Creditors:          £5,900                                    £6,300

Transactions during 1996:

• Amount received from debtors £127,600
• Amount paid to creditors £93,200
• Cash sales £23,200
• Discount allowed to debtors £2,400
• Bad debts written off £800
• Increase in provision for doubtful debts £250
• Refunds received from creditors £80

The gross profit earned by the merchant during 1996 was?

Select ONE answer:

1. £38,820
2. £38,870
3. £61,750
4. £62,180

 

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

• • • • • • Debtors

• Dr Balance b/d £4,800
  Dr Sales £131,400
  Dr Totals £136,200
  • • • • • Cr Bank £127,600
            Cr Discount Allowed £2,400
            Cr Bad Debts £800
            Cr Balance b/d £5,400
            Cr Total £136,200

             

• Total Sales = Cash Sales + Credit Sales = £23,200 + £131,400 = £154,600

• • • • • Creditors

• Dr Bank £93,200
  Dr Balance c/d £5,900
  • • • • • Cr Balance b/d £6,300
            Cr bank 80
            Cr Purchases credit £92,720
            Cr Totals £99,100

             

• Cost of Sales = Opening Stock + Purchases – Closing Stock = £10,300 + £92,720 – £10,600 = £92,420
• Gross profit = Sales – Cost of sales = £154,600 – £92,420 = £62,180

 

 

This work is licensed under a Creative Commons Attribution 4.0 International License.

A firm‘s capital at the beginning of a year was £16,500 and its capital at the end of the same year was £11,350.

The proprietor‘s drawings during the year totalled £3,300 and no new capital was introduced.

The firm‘s profit or loss for the year was?

Select ONE answer:

1. Loss of £1,850
2. Profit of £1,850
3. Loss of £8,450
4. Profit of £8,450

 

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Opening capital + Profit (-loss) – Drawings = Closing capital.  Therefore £16,500 + profit or loss – £3,300 = £11,350.  Therefore, loss = £1,850
2. Not correct
3. Not correct
4. Not correct

 

 

This work is licensed under a Creative Commons Attribution 4.0 International License.

A firm has net assets of £8,000, net current assets of £3,000 and no long-term debt.

Its fixed assets are?

Select ONE answer:

1. £3,000
2. £5,000
3. £8,000
4. The total of fixed assets cannot be ascertained from the information provided.

 

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – Fixed Assets + Net Current Assets = Net Assets.  Thus Fixed Assets + £3,000 2= £8,000, Therefore, Fixed Assets = £5,000
3. Not correct
4. Not correct

 

 

This work is licensed under a Creative Commons Attribution 4.0 International License.

Catherine O’Byrne‘s trade is seasonal.

Her monthly sales are 50% higher in the three summer months than in the other nine months of the year. She earns a gross margin of 25% in the summer months and 20% during the rest of the year.

If her total sales for the year ended 30 April were £283,500, her cost of sales for the same period was?

Select ONE answer:

1. £212,625
2. £222,075
3. £223,256
4. £226,800

 

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

Answer 2 analysis:

• Let sales in the low season = X
• Therefore, Sales in the high season = 1.5X
• Total sales = £283,500 = (9 X) + (3 * 1.5X) = 13.5X
• Therefore X = £283,500 / 13.5 = £21,000
• Sales in 9 off-peak months = 9 * £21,000 = £189,000
• Sales in 3 summer months = 3 * £21,000 * 1.5 = £94,500
• 3 months – 9 months = Total Sales: £94,500 + £189,000 = £283,500
• Gross Profit Margin: 25% – 20%
• Gross Profit (sales * gross profit margin: £23,625 +£37,800
• Cost of Sales (sales – gross profit): £70,875 +£151,200 = £222,075

 

 

This work is licensed under a Creative Commons Attribution 4.0 International License.